DIFC Courts to open Technology and Construction Division

Summary: The DIFC Courts have announced the introduction, in October, of a new Technology and Construction Division. This potentially offers an attractive combination of industry expertise, allowing more efficient resolution of complex disputes, paired with the smooth delivery and robust enforceability of DIFC Court judgments. However, a court is only as good as its judges, so the new Division must appoint an experienced and capable bench to succeed.

On Tuesday 15 August, the DIFC Courts announced that the new specialist Technology and Construction Division (“TCD”) will be introduced in October, following a public consultation in March and April this year. The introduction of a dedicated technology and construction-focussed court constitutes a potentially significant new forum for resolving disputes in the Middle East and further afield.

The Dubai International Finance Centre (“DIFC”) is a well-established financial free zone in Dubai, which operates under a separate jurisdiction from the Emirate of Dubai. Unlike Dubai, which follows a civil law system, the “offshore” DIFC is a common law jurisdiction akin to England & Wales, Singapore, Hong Kong and others. The DIFC also has its own court system, largely modelled on the English Commercial Court, which is separate from the “onshore” Dubai courts.

Many businesses in the UAE choose to have their contracts governed by DIFC law and made subject to the jurisdiction of the DIFC Courts, given the good reputation of the common law and English Commercial Court in resolving commercial disputes. Judgments of the DIFC Courts are also relatively straightforward to enforce in Dubai, making the DIFC Courts an attractive choice of jurisdiction.

Within the construction and IT industries, current market practice favours arbitration over the courts, often administered by a local arbitration institution such as the Dubai International Arbitration Centre or the Abu Dhabi Commercial Conciliation and Arbitration Center. There is a perception that the courts, both in Dubai and the DIFC, lack the specialist knowledge necessary for resolving the often highly technical disputes. Unlike using the courts, when parties submit to arbitration they are able to nominate arbitrators with relevant expertise. This offers a significant advantage over the courts, in that the person passing judgment on the dispute has the understanding to grasp the key issues and make decisions accordingly.

However, the enforcement of domestic arbitration awards in the UAE is often complicated by the fact that there is no standalone federal arbitration law. Instead, enforcement is governed by just 16 articles of the UAE Federal Civil Procedures Code, which can result in enforcement being substantially delayed or even denied.

The introduction of a dedicated Technology and Construction Division therefore offers an attractive prospect. Its scope includes:

construction and engineering disputes;

claims against architects, engineers and other professional consultants;

disputes involving computers, software and related systems; and

challenges to the decisions of arbitrators in construction disputes.

A court which combines technical expertise and facilitates enforceable judgments should offer the best of both worlds to developers, contractors and consultants working in the UAE and the wider region.

That said, the success or failure of the TCD will depend, in large part, on the quality of judges it is able to attract. Without specialist judges, the TCD will not be able to offer a meaningfully different option to other dispute resolution forums in the region. The DIFC is therefore likely to recruit from a jurisdiction with an existing dedicated construction and technology court (such as Australia, Hong Kong, Singapore, Japan, and England & Wales). No doubt specialist construction and technology lawyers and judges in those jurisdictions are busy dusting off their CVs at this very moment.

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